Hiring directly isn’t always the right move. Maybe you need extra hands for a busy season, or you have found the perfect candidate in a country where you have no company. Two providers often come up: an employer of record (EOR) and a staffing agency. Both can put someone to work for you without you being their direct employer, but they solve different problems.

This guide explains what each one does, how they differ, when each fits, and what to check before you sign.

Disclaimer: This article is based on official and public sources—international and government guidance and providers’ own service pages—as of 10 November 2026. It is not legal or tax advice. Employment rules differ by country and change often, so confirm your situation with a qualified local adviser.

What is an employer of record?

An employer of record is a company that becomes the legal employer of a worker on your behalf, usually in a country where you have no entity of your own. The EOR signs the local employment contract, runs payroll, withholds taxes, pays social contributions, and provides statutory benefits. You choose the person and direct their daily work.

EOR providers describe the model in similar terms. Deel’s employer of record page focuses on hiring employees abroad without setting up an entity. Remote’s EOR page lists uses such as staffing a new region, converting contractors to employees, and employing an acquired team. Oyster’s EOR product page covers contracts, payroll, benefits, and offboarding.

The key point: you usually bring the candidate. An EOR is an employment and compliance service, not mainly a recruiting service, although some EOR platforms now offer sourcing add-ons.

What is a staffing agency?

A staffing agency—also called a recruitment, employment, or temporary work agency—helps businesses find workers. Most offer some mix of three services:

• Temporary or contract staffing. The agency employs or engages the worker and assigns them to your business for a period. You direct the work; the agency handles pay and admin.
• Temp-to-hire. The person starts on a temporary assignment, with the option for you to hire them permanently later.
• Direct placement (permanent recruitment). The agency sources and screens candidates, and you hire the chosen person onto your own payroll. The agency typically charges a placement fee and is not the employer.

Large firms list these services openly. Randstad’s services page covers temporary staffing, flexible-to-permanent staffing, permanent recruitment, and payrolling. Adecco’s employer services in the US include temporary staffing, permanent recruitment, and onsite management. ManpowerGroup describes contingent and permanent staffing, while Robert Half’s hiring services include contract talent, full-time talent, and executive search.

The ILO’s Private Employment Agencies Convention, 1997 (No. 181) captures this split. It distinguishes agencies that match job offers and applications without becoming a party to the employment relationship from agencies that employ workers to make them available to a “user enterprise” that assigns and supervises their tasks. The ILO notes that the Convention provides a framework for licensing and regulating agencies and protecting the workers who use them.

Key differences at a glance

Factor	Employer of record	Staffing agency
Main job	Legally employs a person you have already chosen	Finds candidates; may also employ them on temporary assignments
Who sources candidates	Usually you	Usually the agency
Legal employer	The EOR	The agency for temp/contract work; you for direct placements
Typical engagement	Ongoing, often long-term employment	Short-term cover, projects, trial periods, or one-off hires
Geography	Often cross-border, where you lack an entity	Usually local, within markets where the agency operates
Cost structure	Recurring service fee on top of salary and employer costs	Mark-up on hourly pay for temps; one-off placement fee for permanent hires
Day-to-day direction	You	You, during the assignment

This is a general pattern; contracts vary.

Compliance and liability: who is responsible for what?

In both models, the provider takes on core employer tasks such as payroll and contracts. But you don’t hand over every responsibility. Because you direct the work, you usually remain responsible for things like workplace safety, working-time practices, and how you treat people on site.

In the US, the Department of Labor published a proposed rule on joint employer status in April 2026 that names staffing agencies and their clients as a typical “vertical” joint-employment scenario. It proposes looking at who hires or fires, who substantially controls schedules or conditions, who sets pay, and who keeps employment records. Joint employers can be jointly liable for unpaid wages. At the time of writing, this is a proposal, not a final rule; see the Federal Register notice for details.

In the EU, the Temporary Agency Work Directive 2008/104/EC says agency workers’ basic working and employment conditions during an assignment must be at least those that would apply if the user company had hired them directly. The European Commission’s summary adds that user companies should tell agency workers about permanent vacancies, and that clauses blocking a later direct hire can be declared void.

In Great Britain, GOV.UK’s agency worker guidance explains that agency workers get certain rights from day one and, after 12 weeks in the same job, equal treatment on matters such as pay and annual leave.

Local rules can limit agency work—and sometimes EOR

Some countries restrict temporary agency work. The EU directive allows such limits only when justified on general-interest grounds, and asks member states to prevent successive assignments designed to get around the rules. Germany is a well-known example: its Act on Temporary Agency Work (AÜG) requires agencies to hold a permit and generally caps assignment of the same worker to the same user at 18 consecutive months, with exceptions under collective agreements. Germany’s customs authority summarises these requirements for foreign employers.

This matters for EOR too. Some laws look at substance rather than labels. The AÜG, for example, treats workers as assigned to a user when they are integrated into the user’s organisation and follow its instructions—which can describe an EOR arrangement. Where that applies, an EOR may need a licence, and time limits may follow. Always ask how a provider handles this in each country.

When an EOR fits

• You have chosen a candidate in a country where you have no entity.
• You are testing a new market before deciding whether to set up a company.
• You want to move long-term contractors onto local employment contracts.
• You need to employ a relocating team member or an acquired team quickly.

When a staffing agency fits

• You need people fast for seasonal peaks, leave cover, or short projects.
• You lack the time or network to source candidates yourself.
• You want to try someone out before offering a permanent role (temp-to-hire).
• You want help filling a hard-to-recruit permanent role (direct placement).

Some businesses use both: an agency to find a candidate abroad and an EOR to employ them.

Decision checklist

1. Do you already have the person you want to hire? If yes, lean EOR (or hire directly if you have an entity).
2. Is the need temporary or ongoing?
3. Is the work in a country where you have a registered entity?
4. Will you direct the person’s daily work and schedule?
5. Does local law limit agency assignments or require licences?
6. What is your total budget, including salary, employer costs, and provider fees?
7. Would the person be better served—and better protected—as your direct employee?

Questions to ask providers

For an EOR

• Do you employ through your own entity in this country, or through a local partner?
• Do you hold any licence local law requires for this arrangement?
• Which liabilities do you accept in the contract, and which stay with us?
• How are terminations, severance, and notice handled and charged?
• What benefits are statutory here, and what is optional?

For a staffing agency

• Are you licensed or registered where required?
• How do you screen candidates, and what checks do you run?
• How is the mark-up or placement fee calculated, and is there a replacement guarantee?
• What does temp-to-hire conversion cost, and are any conversion terms enforceable under local law?
• How do you ensure equal-treatment and pay rules for agency workers are met?

Get answers in writing and compare full quotes rather than headline fees.

Risks to watch

• Misclassification. Calling someone a contractor doesn’t make them one. The IRS guidance on independent contractor or employee and GOV.UK’s employment status overview both focus on the real working relationship. An EOR or agency can help fix this, but only if the model matches reality.
• Co-employment and joint employment. Controlling a worker’s pay, schedule, or hiring and firing can make you jointly responsible alongside the provider.
• Assignment limits. Long “temporary” assignments may breach local caps or trigger direct-employment rights.
• Provider risk. If a provider uses unvetted partners or fails to pay taxes, the people working for you—and your reputation—can suffer.

FAQ

Is an EOR a type of staffing agency?

Not usually. An EOR employs people you have already chosen; a staffing agency mainly finds people. In some countries, though, an EOR arrangement may be regulated like agency work.

Who is the legal employer with a staffing agency?

For temporary or contract assignments, typically the agency. For direct placements, you are.

Which is cheaper?

It depends on the role, country, duration, and provider. Compare total cost over the expected engagement, not just the monthly fee or mark-up.

Bottom line

Choose an EOR when you know who you want to hire but have no entity where they live. Choose a staffing agency when you need help finding people, especially for temporary or trial roles. Whichever you choose, check local rules, clarify liability in writing, and treat the people doing the work fairly.